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Goldman Sachs Asset and Wealth Management Earnings Report Goldman Sachs Asset and Wealth Management Earnings Report

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Goldman Sachs (NYSE:GS) reported its Q4 2023 earnings, revealing a strategically crafted path for the company. Chairman and CEO David Solomon reflected on the year as β€œa year of execution” as the firm continues to realign its focus away from consumer finance.

Asset and Wealth Management Performance

Amidst this restructuring, the Asset & Wealth Management segment exhibited noteworthy improvement, primarily driven by significant gains in equity and debt investments alongside increased management and other fees.

Global Banking & Markets experienced a reduction in revenue from investment banking, in line with an industry-wide decrease in mergers and acquisition volume. Notably, revenue from equity underwriting, predominantly from secondary offerings, witnessed a year-on-year increase.

Financial Highlights

The Q4 GAAP EPS of $5.48 marginally surpassed the prior quarter, with the figure exceeding the consensus expectation of $3.93 and marking a considerable uptick from $3.32 in Q4 2022. Notably, excluding specific items related to the company’s restructuring and FDCI special assessment, the Q4 2023 earnings totaled $6.31 per share.

While the total net revenue of $11.3B outperformed the consensus estimate of $11.0B, it lagged behind the prior quarter’s $11.8B but showed growth from $10.6B a year ago.

Operational Performance

The net interest income for Q4 amounted to $1.34B, falling below the Visible Alpha consensus of $1.66B. Notably, this marked a decline from $1.55B in the previous quarter and $2.07B a year ago, reflecting a shift in the company’s interest income dynamics.

The provision for credit losses stood at $577M, a notable increase from $7M in Q3 and $972M in Q4 2022, indicative of the ebb and flow in credit risk management.

Operational Expenses and Financial Position

Total operating expenses amounting to $8.49B saw a 6% decline from the previous quarter and rose 5% from Q4 2022. Notably, compensation and benefits expenses reflected a substantial decrease of 14% quarter-on-quarter and 4% year-on-year.

Goldman Sachs also reported an increase in loans to $183B at the end of December 2023 from $178B at the end of September, with deposits growing to $428B from $403B at the end of September. Additionally, the headcount witnessed a decrease to 45,300 from 45,900 in the previous quarter and 48,500 at the end of December 2022.

Segment-wise Revenue Breakdown

Within the Global Banking & Markets segment, net revenue of $6.35B represented a 21% decline from the previous quarter and a 3% decrease year-on-year. Specifically, investment banking fees saw a 12% drop year-on-year, while FICC revenue slid by 24% year-on-year. In contrast, equities revenue witnessed a substantial 26% increase year-on-year.

On the other hand, the Asset & Wealth Management segment reported net revenue of $4.39B, marking a 36% increase quarter-on-quarter and a notable 23% rise year-on-year. Management and other fees within this segment totaled $2.45B, reflecting a 2% increase quarter-on-quarter and a 9% rise year-on-year. Platform Solutions net revenue remained steady quarter-on-quarter at $577M and exhibited a 12% increase year-on-year.

The earnings release was accompanied by a conference call scheduled for 9:30 AM ET, signifying a pivotal moment for the company to provide deeper insights into its strategic direction and financial performance.

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